European Union leaders are poised to impose new sanctions against Russia as Ukraine's president warns the conflict with Moscow threatens peace and stability for Europe as a whole.
European Commission President Jose Manuel Barroso said on Saturday the EU was prepared to toughen sanctions against Russia but added that the bloc also wanted a political deal to end the confrontation.
At a news conference in Brussels with Petro Poroshenko, the Ukrainian president, Barroso, who said on Friday he had spoken to Russian President Vladimir Putin on the phone to condemn significant incursions by Russian forces into Ukraine, said the situation was getting close to the point of no return.
Barroso made it clear the EU would take a twin track approach, which would entail threatening stronger sanctions against Russia while keeping the door to negotiations open.
He stressed that the EU was running out of patience and that Russia was adopting a very high risk strategy.
Poroshenko, who on Wednesday cancelled a trip to Turkey amid reports that Russian forces were on Ukrainian soil, said a strong EU response was needed because his country is subject to "military aggression and terror".
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"Thousand(s) of the foreign troops and hundreds of the foreign tanks are now on the territory of Ukraine," Poroshenko told reporters, speaking in English.
"There is a very high risk not only for peace and stability for Ukraine but for the whole peace and stability of Europe."
NATO estimates that at least 1,000 Russian soldiers are in Ukraine even though Russia denies any military involvement in the fighting that has so far claimed 2,600 lives, according to UN figures.
As pro-Russia separatist rebels continue to fight for independence in the eastern regions of Donetsk and Luhansk, Ukraine said Saturday that it was abandoning a city where its forces have been surrounded by rebels for days. It was also pulling back from another it had claimed to have taken control of two weeks earlier.
Colonel Andriy Lysenko, a spokesman for Ukraine's national security council, said regular units of the military had been ordered to retreat from Novosvitlivka and Khryashchuvate, two towns on the main road between the Russian border and Luhansk, the second-largest rebel-held city.
Ukraine had claimed control of Novosvitlivka earlier in August.
The statements by Lysenko indicate that Ukrainian forces were facing increasingly strong resistance from Russian-backed separatist rebels just weeks after racking up significant gains and forcing rebels out of much of the territory they had held, the Associated Press news agency reported.
Poroshenko said Ukraine would welcome an EU decision to help with military equipment and further intelligence-sharing.
Barroso provided no specifics about which sanctions the heads of state and government might adopt to inflict more economic pain to nudge Russia towards a political solution.
"No one's interest is served by new wars on our continent," Barroso said.
The EU leaders were likely make a political decision on Saturday, with the exact targets of sanctions to be divulged by the EU executive in the coming days.
The United States and the EU have so far imposed sanctions against dozens of Russian officials, several companies and the country's financial industry. Moscow has retaliated by banning food imports.
New EU sanctions have to be agreed unanimously - a requirement that has in the past blocked or softened decisions since some nations fear the economic fallout.
Russia is the EU's third-largest trading partner and one of its biggest oil and gas suppliers.
Barroso said that the EU - a bloc encompassing half a billion people and stretching from Lisbon to the border with Ukraine - stands ready to grant Kiev further financial assistance if needed.
The bloc will also organize a donors' conference to help rebuild the country's east at the end of the year, he added.